An angular glass building on the waterfront here used to be the headquarters of a banking giant with operations in Europe, North America and the Middle East.
Now, it houses a shadow of that behemoth — a small bank doing business only in Iceland and lacking both the trading culture and ambitions of its failed predecessor.
The metamorphosis is a result of one of the biggest bank crashes any country has ever had. The risk in Iceland’s financial system has dissipated, but the basic businesses of banking have shrunk as well. Lending to consumers and businesses has slowed to a fraction of what it was before the crisis.
“We moved from a situation where the one that took the biggest risk was the employee of the month, to a situation where the one that took the least risk became the employee of the month,” said Bjarni Benediktsson, the Icelandic finance minister. “I think we need to find a balance in between.”
Iceland is a living experiment in what can happen when a country forces its financial firms to go under, rather than bailing them out, as much of the rest of the world did during the global financial crisis.